HSBC "keen to lend before Christmas" as bank increases borrowing limits for first-time buyers: "Excellent news"
HSBC has unveiled a shake-up of its residential mortgage lending rules to give first-time buyers more borrowing power – as experts say the bank is “keen to lend” in the run-up to Christmas.
From Monday 1 September, first-time buyers can now access loan-to-income (LTI) multiples of up to 5.5 times their salary if they meet minimum income levels.
Sole applicants earning at least £35,000 and joint applicants with a combined income of £55,000 or more will be eligible for enhanced borrowing.
The bank has also increased the maximum LTI for other borrowers.
Customers earning between £45,000 and £100,000 with a loan-to-value ratio of 85% or below can now borrow up to five times their income, up from the previous 4.75 times.
Mortgage brokers and financial experts welcomed the move as a sign that lenders are competing harder for business, while warning borrowers not to over-stretch themselves.
Stephen Perkins, Managing Director at Norwich-based Yellow Brick Mortgages said first-time buyers will benefit.
He said: “HSBC becomes the latest high street lender to enhance their affordability criteria, allowing borrowers bigger lending budgets, in particular boosting first-time buyers.
"This is excellent news for buyers who now may open up other potential properties in their search. Of course, care is needed to ensure buyers do not over-stretch themselves should rates increase in the future.”
Riz Malik, Director at Southend-on-Sea-based R3 Wealth, said banks are improving their deals in the last few months of the year.
He said: “Lenders are keen to lend as we approach the run up to Christmas. HSBC’s updated offering gives more choice to first-time buyers and movers alike.”
Justin Moy, Managing Director at Chelmsford-based EHF Mortgages, said it was an “excellent opportunity” to secure that dream home.
“Another high street lender is pushing the boundaries on what they will lend to first-time buyers and homemovers, joining a growing number of enhanced mortgage options for those trying to get onto the property ladder.
"In terms of choice, this is an excellent opportunity from HSBC for those with higher disposable income to be able to push a little further and buy that dream home.”
Aaron Strutt, Product and Communications Director at London-based Trinity Financial, added: “HSBC is the latest lender to start offering 5.5 times salary mortgages to first-time buyers providing single applicants earn £35,000 or joint borrowers have a combined income of at least £55,000.
"So many of HSBC’s rival lenders are offering high income multiples that the bank probably decided it needed to make the change to keep up with the competition, as well as to help more first-time buyers borrow the money they need to get on the property ladder.”
